The long awaited amendments of Chinese Trade Mark law will be implemented on 1 May 2014, but what does this mean for international trade mark rights holders?
The new law
After several years of lobbying, a new trademark law has been passed in China that is intended to improve the scope for trademark owners to enforce their rights, deter potential infringers and ensure that trademark attorneys are regulated to an appropriate standard.
The new law will introduce certainty and predictability into the trademark examination process, ensuring that the procedure follows mandatory time frames for examination. Unlike the current law, where there is no statutory timeframe, the aim is to allow a new application to proceed to registration within 15 to 18 months after filing. This will include a preliminary examination after 9 months. Opposition cases are to be decided within 12 months from the date of publication, subject to a 6 month extension being allowed in the appropriate circumstances.
Despite the benefits that the new timeframe will bring for trademark owners, in terms of imparting certainty, no provision has yet been introduced to allow an application to be suspended, whilst a rights owner pursues non-use cancellation proceedings against an earlier filed mark.
The new rules introduce a general provision that all trademark applications must be submitted in good faith. This is intended to prevent trademark attorneys or third parties from filing an application, in the knowledge of an existing prior right.
Under the new provisions advertisers will be prevented from labelling their products or packaging as “well-known trademarks”. However, the act is silent as to whether advertisers in China can use similar terms, i.e. “famous trademark”, “the top brand”, etc.
Amongst the most welcome changes is the fact that the amount of damages available in trademark infringement cases will increase to six times the current maximum. This will increase the amount of statutory damages available to the equivalent of $500,000, from the current maximum equivalent to $82,000. The court is also given the discretion to impose a heavier penalty when an infringer commits trademark infringement more than once in a 5 year period.
Following the introduction of the new law, it will become more vital that trademark owners are more proactive regarding the use of their trademarks in China. If the trademark owner has not used the trademark in China for the past three years, and cannot provide any evidence of damages, the alleged infringer will have a defence.
From the perspective of all potential trademark applicants, the most welcome change envisaged is the introduction of multi-class filing system. This will allow a single application to be filed in respect of a number of different classes of goods and services, rather than the current system which allows only one application to be made for each class of goods and services of interest. The proposed change will reduce the applicant’s costs significantly.
The impact
The long awaited Chinese trademark law due to come into force 1 May 2014, is expected to increase certainty of procedure and reduce costs, whilst also deterring potential infringers.
At present a trademark application can take between 2 and 3 years to proceed to registration. The new law makes it clear that, in a straightforward case, an application will proceed to registration in around 15 to 18 months.
Owners of Chinese trademark registrations need to be aware that, once the rules are implemented, they must be able to produce evidence of use of their mark in China for at least three years prior to any infringement action being brought, in order to avoid a counter-challenge. A claim for infringement must also be substantiated by proof of any damage suffered.
In order to strengthen the position of trademark owners, we strongly recommend that trademark portfolios are kept up-to-date in China and reviewed regularly to ensure the adequacy of protection and use.
Over the coming months, we expect to see some minor amendments to the new rules, to address some of the finer points that require clarification. We look forward to seeing how these long-awaited changes work in practice, and how the Chinese Trade Marks Office and the courts will proceed to implement the new regulations.